WiLAN to restructure business, slash dividend, Skippen to stay as CEO

WiLAN says it will be restructuring the business by the end of this year and slashing the company's dividend by 76 per cent starting in January in response to a difficult environment for patent licensing companies.

The Ottawa-based firm (TSX:WIN) says the restructuring will affect about 30 per cent of its workforce but it wasn't immediately clear whether some would be transferred to a new research and development company that WiLAN is planning to spin off. It intends to retain a minority interest in the new company.

It says the restructuring will reduce cash operating expenses by between US$8 million and $10 million per year.

WiLAN also says it will cut what it pays in dividends, which are paid in Canadian currency, to five cents per share annually from 21 cents per share. The Jan. 6 dividend will be 1.25 cents per share, down from 5.25 cents payable Oct. 6.

For the first nine months of 2014, it recorded US$15.2 million in dividend payments under the old rate.

"While these have been very difficult decisions to make, I firmly believe we can prosper in an IP market that is under pressure from its changing legal environment," CEO Jim Skippen said in a conference call.

Mr. Skippen also announced his decision to delay his retirement announced in the summer. He will now stay at the helm for at least three years.

"While challenges are in front of us, I look forward to providing the leadership necessary to manage through this transition phase an execute on our plan for long-term growth," he said.

The restructuring and dividend cut were announced Wednesday with WiLAN's third-quarter financial report, which showed its revenue from licensing patents was down 12 per cent from a year ago and its adjusted earnings fell about seven per cent.

WiLAN's revenue for the three months ended Sept. 30 was US$21.4 million, adjusted earnings were US$12.2 million or 10 cents per share and net income under U.S. accounting rules was $829,000.

In the third quarter of 2014, reported in U.S. currency, WiLAN's revenue was $24.7 million, adjusted earnings were $13.2 million or 11 cents per share and the company had a net loss of $375,000.

WiLAN's shares tumbled in mid-afternoon trading on the Toronto Stock Exchange after news of the restructuring, falling 65 cents to $1.85.